Arctic National Wildlife Refuge Battle Ends, But Drilling Not A Given
It was hardly a footnote in most national stories on the issue, but Congress' passage of the Republican tax bill will be a chapter in Alaska's history books. The law opens a part of the Arctic National Wildlife Refuge to oil development, ending an epic, nearly four-decade battle.
For years, environmental groups, the oil industry, Alaska Native communities and the state's political leaders have debated the potential consequences of oil development in ANWR — on species like caribou and polar bears, on Alaska's oil-dependent economy, on nearby villages and on the climate.
But now, those hypotheticals are about to get real. The tax bill calls for the federal government to hold at least two oil and gas lease sales in the next decade. And Alaska might finally get an answer to one of its big questions: which oil companies — if any — will actually want to drill in ANWR?
For now, the top three oil companies in Alaska are keeping their cards hidden. ExxonMobil declined to comment for this story. ConocoPhillips said in a statement it will "consider it against other opportunities in our portfolio, just as we do with exploration opportunities worldwide." BP referred all questions to an industry lobbying group, the Alaska Oil and Gas Association. Kara Moriarty, the association's president, said she has no idea what oil companies might bid on leases to drill in the Arctic Refuge.
"They don't talk about whether they're participating in a lease sale or not because it's a highly competitive industry," Moriarty said.
That said, there are clues that oil companies are pretty curious about the 1002 area — the 1.5 million-acre section of the Refuge Congress just opened up for oil development. David Houseknecht, of the U.S. Geological Survey, is an expert on Alaska's oil resources. Lately, he's been getting a lot of calls.
"I've been contacted by companies as far away as Australia asking, 'well it looks like the legislation might pass that would allow exploration of the 1002 area. We are interested in evaluating whether or not we would like to participate in such a lease sale,'" Houseknecht said.
There are good reasons for oil companies to be asking questions, he continued. The data on how much oil is in the Arctic Refuge is extremely limited. Companies haven't been able to explore the area since the 1980s. But the data that does exist is intriguing. USGS estimates there's potentially somewhere between 4.3 and 11.8 billion barrels of oil in the Arctic Refuge's 1002 area. Those are huge numbers. For comparison, Alaska's second biggest oil field, Kuparuk, has produced about 2.5 billion barrels of oil.
Moreover, Houseknecht said the 1002 area has other advantages. The oil potential lies on shore — potentially an easier target than more technically complicated and expensive drilling in the Arctic Ocean. Alaska is also in a politically stable country. Those are big pluses for the oil industry. Houseknecht noted there aren't many other places on the planet like that.
The Arctic Refuge's 1002 area is "quite unique when you look around the world for areas where there may be billion-barrel opportunities for discovery," Houseknecht said.
But there are also uncertainties. Any oil production in the Refuge isn't likely to occur for at least a decade. But at today's low oil prices, developments in the Lower 48 are often cheaper for oil companies to pursue than projects in Arctic Alaska — especially with the rise of improved oil recovery techniques like hydraulic fracturing.
"It's clear Alaska needs more development," said Wood Mackenzie analyst Cody Rice. "It's not as clear to me that oil companies need big, complicated Arctic projects right now when you can see billions of barrels in resource being added on an annual basis in West Texas."
It's also a safe bet that environmental groups are going to continue fighting oil development in the refuge any way they can, including in court. Erik Grafe, an attorney with EarthJustice in Anchorage, said Congress may have changed the law to allow drilling in the Arctic Refuge, but all other environmental laws haven't gone away.
"If the Trump administration tries to rubber stamp oil decisions or takes shortcuts, we won't hesitate to go to court to enforce these environmental laws," Grafe said.
But Moriarty of the Alaska Oil and Gas Association said for the industry she represents, dealing with environmental opposition is just part of the job.
"Alaska has been the poster child for litigation cases for any type of development on [Alaska's] North Slope. And so I think companies sort of factor that in," Moriarty said.
Alaska Sen. Lisa Murkowski, who spearheaded the measure to allow drilling in the Arctic Refuge's 1002 area, is also confident that the environmental opposition won't dissuade the oil industry from pursuing development there.
Speaking to reporters in Anchorage several days before the tax bill passed, Murkowski added she's not surprised oil companies aren't publicly expressing interest in ANWR.
"If the door is never even cracked open, they're not going to line up. They have other prospects to look to," Murkowski said. "And only after such time as we allow for it to even be considered would we anticipate that you're going to have the companies show any interest."
Now, that door is open, and the world is going to find out just how much the oil industry really wants to drill in the Arctic National Wildlife Refuge.
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